Volvo 1999 Annual Report Download - page 22

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20
Fiscal year 1999
Prévost and Nova BUS have integrated their spare-parts distribution organizations
while MASA’s distribution of spare parts has been merged with Volvo Trucks’ counter-
part. Further cooperation with Volvo Trucks was begun during the year by Prévost,
whose customers will be able to benefit from Trucks’ mobile service organization,
Roadside Truck Assistance Network.
Volvo Construction Equipment became wholly owned by AB Volvo in 1995 and since
then a number of acquisitions have been made. The largest acquisition was made in
1998, with the acquisition of the construction equipment business of Samsung, in
South Korea.
A comprehensive program to integrate the operations acquired in South Korea was
under way throughout 1999. As a result, during the autumn the South Korean
company began deliveries of a new generation of Volvo excavators which, in an initial
stage, are being developed to meet Volvo’s demands with respect to such characteris-
tics as quality, safety and concern for the environment. The next stage will be to
introduce additional Volvo components in the machines.
The operations in South Korea have undergone substantial rationalization, with the
number of employees being reduced by nearly 25 percent and the level of break even
being reduced by half. Since the second quarter of 1999 – earlier than expected – the
formerly unprofitable operations have contributed to Volvo earnings. This has been
achieved despite the financial crisis in South Korea and the rest of Asia that resulted
in low sales in the region. A program is under way in the marketing sector to consoli-
date Samsung’s former dealer network with Volvo’s, and efforts are being made to
increase the percentage of exports from approximately 30 percent to double that
figure.
Volvo Aero has made a number of acquisitions, the largest being The AGES Group,
an American organization. During 1999 Volvo increased its holding in AGES from 57
percent to 86 percent, which was well-received by employees as well as by customers
and partners. According to the Boeing company, Volvo’s growing role in The AGES
Group was of decisive importance when the agreement with Boeing was signed (see
page 22, number 8). In connection with this agreement, Volvo acquired Jet Support,
an American company, which helped make it possible to conclude the agreement with
Boeing according to plan.
During the spring of 1999 Volvo Aero acquired Norsk Jetmotor AS, now Volvo Aero
Norge AS, which produces components for aircraft engines. Integration of the company
during the year resulted in positive effects in purchasing, among other sectors, but also
in the knowledge area – where there was a valuable exchange of experience related to
quality programs, for example.
Arik Feldm an
Chairm an
Egged –Israel
Transport Coopera-
tive Society
We recently
decided to pur-
chase 400 inter-
city buses and
chassis from
Volvo. We were
highly impressed
by the good and
close cooperation
and pricing, driver
com fort and main-
tenance.
My view of Volvo